Mexico Energy Reform and Bi-National Policy | White & Case LLP International Law Firm, Global Law Practice

Mexico Energy Reform and Bi-National Policy

Mexican President Peña Nieto unveiled his plan to overhaul Mexico's energy sector.

"It is a moment for putting momentous change in the energy sector into historical perspective," says Jonathan C. Hamilton, member of the board of Energy Advisor and the US-Mexico Foundation and partner and head of Latin American arbitration at White & Case LLP.

Latin America long has been marked by cycles of nationalization and privatization, including the "Washington consensus" toward the free market that emerged in the 1990s and the backlash in countries like Venezuela and Bolivia over the past decade or so. For many decades, and throughout two decades of the NAFTA era, the 1938 Mexican nationalization of the oil and gas sector has persisted somewhat like a fly in amber, trapped in time and immutable to change.

In this context, the mere opening of the energy sector trumps most any dispute over the details. Domestically, the potential for change emerged from the unique Pacto Por México that has been driving a series of reforms throughout the year. Economically, the government predicts a boost in investment of US$10 billion a year through 2025, and the creation of up to 2.5 million jobs in the same time period. Politically, the change may bring significant social impact (including potentially on immigration), by creating massive investment flows through the free market, rather than waiting on aid that always seems insufficient.

Critically, internationally, the move represents a major opportunity for increased bi-national collaboration with the US, from private investment to philanthropy. It is indeed a shared destiny, soon to be even more so."